A Rant

True story. When the Lovely Mrs. Sneed was looking for a new SUV to replace her Honda Accord, we looked at three vehicles, the Honda Pilot, the Toyota Highlander and the Saturn VUE. We bought a Pilot almost by accident. The Pilots at our local Honda dealers were just too much money and the dealers were unwilling to budge on the price, because people will normally pay what they ask. A deal at the typical Honda dealer involves them jacking the price above the MSRP and then agreeing to take off the overage, leaving the buyer to pay the original MSRP. Our Pilot came through a broker who sells top-quality used vehicles and occasionally has new vehicles that they were able to get a deal on. We paid about dealer invoice for our Pilot, about six thousand less than the Honda guys wanted for the same car. It was brand new and had thirty miles on it when we got it. We love it. The guys at the Toyota dealership were basically pains-in-the-ass to deal with, so we got nowhere on the Highlander. They were convinced that we were going to buy the only Highlander that they had on the lot, even though it had more features and cost more than we wanted to spend. The Highlander was really nice and has the Toyota reliability. The take it or leave it attitude of the dealer made us leave it. The Saturn VUE built by a great American manufacturing icon, General Motors, failed one very important test. The interior of the car is cheap-looking, made largely of plastic in a way that just screams "plastic crap". This is true of all GM products, no matter their cost. GM skimps on the little things to cut costs. Their mileage lags the Japanese because they are skimping on costs. Everything GM does is based on cost, because GM is near death. Their costs are galloping out of control and an ever smaller group of buyers want their product. So, I was surprised to see that the United Auto Workers have called a strike against General Motors. GM and the UAW are like two guys shooting at one another in a jetliner at 35,000 feet. Someone might win, but it is more likely that they will both lose. The sticky issue in the negotiations centers on an idea by GM to fund a trust for future healthcare costs. A fund that would be run by the union. GM has a liability of $51B in future retiree health coverage. The company is only worth $20B, so they don't have $51B to kick in. That's the rub. The union would have to do the best they can with the money they get. If it runs out it will be up to the union to break the bad news to the members. The same members they promised benefits for life. The average United Auto Worker makes about $70,000 per year, plus benefits. It is estimated that each hour of labor in a GM plant costs the company $73.25 in wages and benefits versus Toyota's $52 per hour US labor cost. Their the healthcare costs alone ($3B per year) add $1500 to the cost of each car. The UAW member enjoys a generous pension plan and a host of benefits for life. The UAW salaries and benefits are simply among the best around. All of these labor costs are swell when you are selling cars like they are going out of style, instead of selling cars that have gone out of style. The old rust belt states are now filled with empty houses, high unemployment and people who would die for a job paying $27.00 an hour, with or without benefits. So, I can't figure out what these UAW knuckleheads think the outcome of this strike will be. The gravy train has made its final stop, and they are refusing to get off. The fact that we see an ever-increasing number of Toyota's, Honda's, Hundyai's, etc. on the road is evidence that something is dreadfully wrong in the American car business. But no one needs me to point that out. It is all related to how much cash those companies have to put into research and development, instead of into healthcare premiums for life for the workers. We can have better and more fuel-efficient cars when the Big Three stop being healthcare providers, who also happens to sell cars and back to guys who sell good cars. I get my healthcare coverage through my former employer, so I'm not advocating that as a bad thing. Until our selfish public officials fix this mess, this is the system that we have. The difference is that I pay to continue that coverage. I pay one-third of the cost of my coverage, which seems more than fair. The UAW retiree pays zip. Free healthcare for life was a noble goal, but like Social Security, it has become unsustainable in its present form. Going on strike isn't going to resolve the unresolvable. Things in this blog represented to be fact, may or may not actually be true. The writer is frequently wrong, sometimes just full of it, but always judgmental and cranky